4/26/2013 - Insurance coverage lacking for many wealthy Americans
A new report indicates that while many of America's high income earners fear that their wealth will be attacked by people wishing to sue them for some real or perceived wrongdoing, they often don't have the protection needed to spare themselves from significant losses.
The report, "Targeting the Rich: Liability Lawsuits and the Threat to Families with Emerging and Established Wealth," was performed by risk analytics firm ACE Private Risk Services. It found that an overwhelming majority of the nation's wealthy - 80% - believe that the large amount of money they earn each year makes them a target for potential litigation. Yet despite this, many of these same individuals don't have sufficient coverage protection, such as umbrella liability insurance. In fact, 40% of respondents said that they had less than $5 million worth of coverage and more than one in every five indicated they didn't have any at all.
According to Jim Hageman, senior vice president of ACE, while some people worry about litigation, they rarely believe their fear will bear itself out. And even if it does, that it won't be particularly costly.
"Half of the people we surveyed thought the worst-case lawsuit would be less than $5 million," Hageman told Insurance Journal. "But our experience is that awards for lawsuits involving serious injury can equal many times that."
Umbrella insurance is a policy that protects individuals' assets, whether they're wealthy or make more moderate incomes. Some might think of it as an insurance policy for the coverage that individuals already have in place, as it provides additional revenue should minimums not be sufficient. In other words, it fills in the gaps for where a basic plan doesn't measure up, especially if someone is suing for more than the plan provides for.
For more information on umbrella insurance, speak with one of Selective's independent agents.